Feasibility study of a crop microinsurance product aimed at Tanzanian smallholder farmers

• Mar 22, 2021
• 1 min

The Alliance for Green Revolution in Africa (AGRA) sought to develop resilience among smallholder farmers of Tanzania through risk transfer products. Faced with the lack of suitable insurance products in the market, it engaged MSC for a feasibility study on the delivery of crop microinsurance to smallholder paddy and maize farmers.

Smallholder farmers comprise more than 80% of the farming community in Tanzania. A little more than 1.9% of their total farmland is irrigated. The combination of small landholdings, rain-fed sources of water, and lower adoption of technology exposes smallholder farmers to the vagaries of weather. Over the past decade, climate change has exacerbated heat waves and droughts in Sub-Saharan Africa. The challenge for Alliance for Green Revolution in Africa (AGRA), a pan-African institution, was to develop resilience among smallholder paddy and maize farmers through risk transfer products. However, the market lacked suitable insurance products because most insurers did not find it feasible to serve smallholder farmers.

AGRA engaged MSC from April to June, 2018 to undertake a feasibility study around the delivery of crop microinsurance to smallholder paddy and maize farmers. The MSC team conducted thorough secondary and primary research by deploying both qualitative and quantitative research tools with the following objectives:

• Understand the features and benefits of crop microinsurance programs and products available in Tanzania;
• Spot the nuances of services that different service providers offer;
• Identify the sources of risks for paddy and maize crops managed by smallholder farmers;
• Determine the level of risk of crop failure.

Based on the positive inferences drawn from the feasibility study, MSC recommended that AGRA implement a crop microinsurance project.